All About Corporate Finance #Finance

hello friends this is himanshu jain from the wall street school in the last decade or so we have trained more than 8 000 candidates in the field of corporate Finance

Investment Banking and Valuations we’ve also placed more than 3 000 students in boutique and bulge bracket investment banks and in many corporate none;">Finance profiles now in the comments section of our previous CashNews.cos we got specific queries from you with respect to questions on corporate Finance

so in this CashNews.co we are trying to address many of the questions specifically pertaining to corporate Finance such as what is corporate

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance what is the job role of a corporate Finance analyst

what are the skills required to be a corporate Finance analyst the salaries that you can expect in this field who are the top recruiters and many more questions like this

we’ll try to address all of these questions in detail in this CashNews.co so watch it till the end let’s get started hello everyone welcome back to the channel so in this CashNews.co we are going to talk about corporate bold; color: #1a73e8; text-decoration: none;">Finance so firstly i’ll be discussing a typical structure of a Finance department of a big entity then

we’ll be talking about the principles of corporate Finance then we’ll be talking about corporate bold; color: #1a73e8; text-decoration: none;">Finance job roles and salaries and then we’ll be discussing what are the skill set and education you require to be in corporate none;">Finance domain so let us start firstly let us understand a typical Finance department of a big organization so a big organization’s

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance department so this is Finance department can be

subdivided into three parts the first one is strategy and planning the second one is Treasury department and the third one is Accounting department there is a lot of overlap lots of direct and direct connection between these three but broadly you can divide

strategy tragedy and Accounting so this Treasury department this department is mainly dealing in cash so it will forecast how much cash will be required by the firm going ahead in the future it will remain in contact with bankers so that it can raise short-term

Loans it will decide on short-term and long-term Investments so basically dealing with cash uh deciding whether we need cash or not if in the cash if in case the cash is sufficient they’ll make very short-term Investments if in case from need

certain cash at a very urgent disposal they’ll raise short-term Loans so this is Treasury department is basically dealing with cash then let’s talk about Accounting department i think very common all of us are familiar with it so it is

basically the backward looking department once any transaction is done it is recorded by this department right it this department is responsible to prepare your Balance Sheet Cash Flow statement Profit and loss account it helps firms to comply with

the Accounting laws gaps and ifrs and in days of the world and they are more or less responsible for tax returns and other Compliances of laws so Accounting department is generally considered monotonous and not considered hardcore

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance which we investment bankers or Equity research assume them to be but this is also #1a73e8; text-decoration: none;">Finance you cannot deny that right they are also dealing with money although they are recording it once the transaction has happened but still it is part of text-decoration: none;">Finance department of a particular organization and strategy and planning is the department the most forward-looking department so it’s the area where the most fun lies in so it decides whether to invest in a project or not so basically your

Capital Budgeting decisions then if in case you decide to invest in a project it will help you to Finance the project so it will make

decisions whether you should go for Debt whether you should go for Equity or you should use your internal sources then it will make strategies to grow Profits to grow Cash Flows it will make forecast and analyze the the the

difference between the last forecast that it has done and the actual performance and then it will take decisions on buybacks Dividends and other things right so this is the the area on which this CashNews.co is going to focus i’m not going to focus on

Accounting part i’m not going to focus on Treasury part strategy and planning is something where uh like you will be dealing with making lots of uncertain but very important decisions and this is the area that we are going to focus in this CashNews.co so let

us move ahead let us talk about principles of corporate Finance okay so before we move ahead let me give you one of my secrets so to understand any particular concept what i

do is i firstly start to understand why this thing exists like let me give you an example if i want to understand character of thanos in avengers movie so the best way the way i would start is i would want to know what is his end goal why he’s into existence right now what he is what’s

what’s he want to achieve so in thanos that movie avengers movie the end goal of thanos was to bring balance to the universe this gives me a very good insight about the character of that person so here also if i can understand the end goal of corporate

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance it will help me to understand the process of corporate none;">Finance so end goal of corporate Finance is very focused very focused there’s only one end goal that is to maximize the wealth of shareholders

it’s very focused so we can divide the corporate Finance decision into three parts the first one is called as financing decision the second one is called as investing

decision and third one is called as dividend decision so what is financing decision financing decision is basically saying me choose the Finance mix that brings down overall

cost of Capital right that is if you can raise money from the cheaper sources don’t go for expensive ones so your internal accumulations that is your reserves are the cheapest one then Debt then Equity this is called as packing order theory

this is rule of thumb always raise the cheapest from the cheapest source possible right this is your financing decision what is your investing decision investing decision tells that invest only in those projects that generates return higher than your hurdle rate that is your minimum required rate

of return so if your minimum required rate of return from any project is let’s say 10 percent do not invest in a project that generates less than 10 percent let me give you rule of thumb here also the riskier the project is the more the risk you are taking higher should be your expected

returns and that higher expected returns will lead to higher hurdle rate higher minimum required rate of return so only invest in those projects that generates minimum required rate of return if it’s not generating it’s not worth your time and dividend decision is kind of residual that

is if you have raised funds you are not able to find out project that is going to generate minimum required rate of return or if you have raised funds you started a project maybe five years down the line it’s not able to meet the criteria it’s better to return back the money right if

the project cannot generate the minimum required rate of return return the money to its original holders to the shareholders right this is dividend decision i don’t have any thumb rule here so this is corporate #1a73e8; text-decoration: none;">Finance in one slide now let us move ahead and let us talk about corporate Finance roles and salary okay so as i said earlier in

this CashNews.co i am not going to talk about Accounting as well as Treasury in this CashNews.co i am just going to focus on strategy and planning that is in essence the corporate #1a73e8; text-decoration: none;">Finance department so the corporate Finance department or strategy and planning could be subdivided into three parts like the

rules could be divided into three parts the first one is junior analyst then senior analyst then manager so people generally join in as a junior analyst you typically work on this resignation for three years then you get promoted to senior analyst level you typically work around four to five years

on this level senior analyst then you are promoted to manager level the expected salary the junior analyst is in india is around five lakhs for senior analyst it is around 10 lakh for manager it is around 25 lakhs right this is my experience this manager directly reports to cfo so he is directly in

link with the big gun right so in my experience uh the salary is 5 10 25 on average level and i’ve taken this data from glassdoor and it says average pay is around seven lakh six and a half lakhs on lower side it is around five black and on higher side it is around 27 lakh and i have very

similar experience so i’ve not used data from multiple sources right now let us move ahead and talk about the skills and education qualification that you need to be operating in strategy and planning basically corporate color: #1a73e8; text-decoration: none;">Finance division of your firm so let’s talk about skills first so you should be really really good with Financial Analysis that’s your core job there right to do Financial Analysis and take decisions

you should be very good with your Financial Analysis you have to do Financial Analysis you should be very comfortable reading Cash Flow Balance Sheet p n l annual reports quarterly reports everything so you have to be really good

with nitty gritties of Accounting you have to be really good at management you have to be really good at taxation why do you need taxation when you are making plan about establishing a project or bringing in some funds or taking dividend decision you have to be very aware of the

tax impact of those decisions on the business right so you have to be very good with taxation then the last skill is economics i think this is something like economic skill is something that you have to apply for taking every macro and micro decision if you are taking a big decision for a firm you

need to apply it even if you are taking a small decision for a firm may be changing your Debt rate from floating to fixed rate then you need to keep the broader picture in mind the fluctuate the fluctuations of Interest Rates going ahead in the future you have to

be very good with economics then educational qualification that you need here you could be a chartered accountant and then start working in this domain you could be mba none;">Finance and start working in this domain you could be cfa that is chartered financial analyst so these are the three typical qualifications that are preferred in corporate none;">Finance department or strategy and planning department of an organization can you be from any other stream and be part of this department yes you could have only done your bcom or engineering for that matter or you could have degree in economics and you can be part of this

department but generally the preferred educational qualification is ca md and cfa hardcore Finance Accounting qualifications right so that’s all about

corporate Finance i hope this CashNews.co added value to your time if in case you have any queries regarding this CashNews.co feel free to reach us at thewallstreetschool.com

or in the comment section below thank you bye